Fundamental Questions for New Contractors

For a number of reasons, now might be a good time to consider what it takes to work as a contractor.

By Sonia Lelii
Dice News Staff | February 2009

It’s
inevitable that during down economies, people mull the idea of working
for themselves. Either they want a sense of more control over their
lives, or they’re worried the ax is going to drop them into a tough job
market with no choice but to set up their own shop. Among the
perpetually optimistic, there are those who say downturns are exactly
the right time to start a business: So long as you have the
staying power (meaning, you can keep your bills paid), you can take
your early steps and make your early mistakes, and be up to full speed
when business bounces back.

So, for a number of reasons, now might be a good time to consider what it takes to work as a contractor.

The
first step is to decide whether you want to set yourself up as a
standalone business – and take on all of the responsibilities of
managing it – or align yourself with agencies that can be middlemen for
you. An agency can help you with things like health benefits, which can
be the deal breaker on whether you decide to go it alone.

"You can go to an IT staffing firm or you can go the individual route. It all depends on the individual," says Katherine Spencer Lee, president of southeast operations at Robert Half International.
"My first advice to someone who wants to work on their own is to find
an attorney and get incorporated. If you establish a company, then you
should get insurance and understand the process of paying quarterly
taxes."

Get a Wingman

If
you want to work with a staffing firm, go to networking events or ask
colleagues about which agencies have good reputations. Target reputable
firms and go online and read about the companies and what types of
technologies they specialize in. It’s also important to know what type
of medical benefits and training they offer. For instance, Robert Half Technology
specializes in Web 2.0 application development, infrastructure support,
virtualization, business intelligence, VoIP and telecommunications. It
wants job candidates to have hard and soft skills. It also provides
medical benefits and takes care of paying your taxes.

Once
you’ve selected an agency, or agencies, call and set up in-person
interviews with each one. Some will give you a technology evaluation,
in other words test you in specific in-demand skills. Once you’ve
passed that, they’ll check your references and determine if they want
to represent you. All the while, remember you should be evaluating the
agency as much as the agency is evaluating you.

Flying Solo

If
you decide to establish your own business, take a long, hard look in
the mirror and make sure you’re comfortable with the idea of marketing
yourself. This is crucial in determining your success. As a
self-employed independent contractor, you’ll always be in job-search
mode – especially at the outset, when you’re just getting started. You
have to be comfortable in picking up the phone and calling companies in
order to determine what their needs are and how you can fulfill their
requirements. If you already have relationships with companies, you
have a head start. "Soft skills are really important," says Spencer
Lee. "It’s all about the ability to communicate."

Another
important point is to determine how much you can charge for your
skills. In this economy, that can be tricky. While companies are
pursuing more independent contractors these days, there are enough
people on the market to affect how you can price yourself. Expect some
friction when it comes to pay scales.

Matt Conley, branch manager at Sapphire Technologies
in Boston, notes that market conditions are causing a realignment of
rates, meaning companies are expecting to pay less. "There are far more
candidates available at any given point than there was at this point
last year," he says. "We are still at a standoff in that companies are
expecting to pay less while consultants are wanting higher pay. With
unemployment on the rise, history will prove that companies eventually
will get their way."

Conley says "good" contractors
will be prepared to roll with the market and accept the ups and down to
stay on projects. Those that are determined to hold their ground will
find themselves missing out on long-term quality projects.